House lawmakers slam DOL: Years-long investigations burden 401(k) plan sponsors
“Prolonged investigations" create "tremendous strain on retirement plan sponsors" and negatively impact retirement savers, wrote House Republicans in a letter sent to Acting Secretary of Labor Julie Su.
The Employee Benefit Security Administration is hurting Americans who save by failing to conduct investigations in a direct and timely manner, two Republican lawmakers wrote in a letter to acting Labor Secretary Julie Su.
“Prolonged investigations carried out by federal agencies such as EBSA create tremendous strain on retirement plan sponsors,” House Health, Employment, Labor and Pensions Subcommittee members Virginia Foxx, R-N.C., and Bob Good, R-Va., wrote. “Plan sponsors report that many of EBSA’s investigations have persisted for years while investigators assigned to these cases are turned over several times. Plan sponsors also report there often appears to be no direction or purpose to the investigations, and they are trapped in investigations that lack an objective, an enforced progress schedule or an endpoint.”
The letter made several specific requests:
- A list of all open investigations by the initial date the investigation opened, the duration of the investigation and the specific purpose of the investigation;
- An explanation of any timeframes or internal guidance imposed on the timeliness of conducting and closing out investigations;
- The criteria used to ensure investigations are timely and efficiently carried out and closed; and
- An explanation of specific steps taken to close all persisting investigations and the consequences if investigations are allowed to languish beyond efficient timeframes.
Michael P. Kreps, a principal at Groom Law Group, said plan sponsors and service providers understand that EBSA investigations are important tools to protect plan participants, but they have legitimate concerns about how the department is conducting some of them.
“Ideally, a DOL investigation would be fairly straightforward and take a few months,” he said. “In practice, however, investigations often remain open for years at a time, and investigators may put the case down for many months, leaving it to sit open while they turn to other projects. It’s not uncommon to cycle through multiple different investigators over the course of the investigation, and that often means having to completely restart or, at the very least revisit, issues that were previously resolved.”
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Foxx and Good set an October 3 deadline for the agency to respond, in accordance with a list of specifications for responding to their request. A Labor Department spokesperson said it has received the letter and is reviewing it.
In August, Foxx and Sen. Bill Cassidy, R.-La., the ranking member of the Senate Health, Education, Labor and Pensions Committee, wrote Su to stop any further action to amend the definition of an investment advice fiduciary. The department sent a new version of a proposed fiduciary rule to the Office of Management and Budget for review early this month.